Home sales in the Greater Toronto Area went down 37.3 per cent in June, 2017 compared with a year ago, Toronto real estate board mentioned Thursday as purchasers moved to the sidelines following the introduction of regulations that are targeted at cooling down Toronto real estate market.
The Toronto Real Estate Board mentioned 7,974 houses changed hands in June, 2017, while the number of new listings on the market climbed 15.9 per cent year-over-year to 19,614.
The average price for all properties was $793,915, up 6.3 per cent from the same month last year, but down 8.1 per cent from May, 2017.
There’s no doubt the market has changed,” said Christopher Alexander, regional director at Re/ Max Ontario-Atlantic Canada.
The data comes after the Ontario government enforced regulations intended to dampen Toronto’s real estate market, where rapidly rising prices have concerned policy-makers at the municipal, provincial and federal levels.
Ontario’s cooling measures, which are retroactive to April 21, 2017, include a 15 per cent tax on foreign buyers in the Greater Golden Horseshoe region, expanded rent controls and legislation permitting Toronto and other metropolis to tax vacant homes.
“While we are seeing a significant dip in sales over the last couple of months, it doesn’t look as if foreign buying activity or a pullback in foreign buying activity was at the root of this,” said Jason Mercer, the director of market analysis for the Toronto Real Estate Board.
“I’d argue it’s more on the psychological side of things, whereby people determine a new major policy pointed at the housing market and take a bit of a step back, temporarily reassess where they are in the marketplace before perhaps go back into the market.”
“Any period the governmental forces intervenes drastically, you determine consumers just kind of wait it out and see how it’s going to take effect,” Alexander said.
“But the market fundamentals in Toronto are still really strong. Lot of buyers, lot of immigration, low interest rates. Toronto is a great city to live in.”
The rise in new listings is likely due to a number of factors, he added, such as the fact that inventory was at a record low last year and that rising prices may have motivated some homeowners to put their properties up for sale.
“A lot of sellers ensure prices going up considerably and are likely to be like,’ may be this is my time to cash out,”‘ Alexander said.
“But buyers have taken a big pause and they’re not willing to pay as much as buyers were back in the first quarter, and sellers are still expecting those prices, so I think that’s why we’re recognizing a huge decline.”
There have been growing concerns that overheated prices in Vancouver and Toronto could be a problem for the broader economy, especially if there is a sudden decline in housing prices triggered by higher interest rates.
The real estate board also revised its outlook for the year downward to between 89,000 and 100,000 transactions and is expecting that the average selling price in 2017 will be up by 13 to 18 per cent. Again, forecast are proven wrong 95% of the times.
I would venture to forecast that 2017 house prices would be lower than 2016 house prices at the end of December, 2017.
Mercer said the board decided to rewrite its outlook in light of the recent housing changes and developing expectations that the Bank of Canada could elevate its interest rate next week or next month for the first time in seven years.
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Source: Maclean’s Magazine
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